If you are familiar with the life insurance market, you must have heard about whole life insurance and term life insurance. And even though these two life insurance policies are the most popular, there are still some basic differences between them. We have outlined the major differences in this article.
Term life insurance has a fixed period of coverage with 10, 20, and 30-years being the most popular. After this time runs out, you will have to renew your term life insurance again if you still want life insurance. Whole life insurance, on the other hand, offers you coverage that lasts for as long as you are alive.
The premiums you pay into whole life insurance builds up into cash value. And in the event that you die, this cash value is paid to your loved ones along with the death benefit of the policy. In addition, you can easily get a loan from your cash value just as long as it has sufficient funds. As for term life insurance, there are no cash value benefit. Your dependents will only collect your term life insurance death benefit when you die.
Term life insurance is pretty popular among most people because its premiums are quite affordable. In fact, your term life insurance company can work out a payment schedule that would not task your budget, if you want. Also, the term life insurance premium remains the same throughout the duration of the policy. In the case of whole life insurance, the premiums are expensive because they protect you during your lifetime.